enerday 2008 · enerday april 11 2008 dresden slide 6 world gas model market equilibrium model with...

ENERDAY 2008Dresden, 11 April 2008

Group Work PresentationsGroup Work PresentationsEnertrainEnertrain Gas Market Modeling with WGMGas Market Modeling with WGM

Christian Christian RahausenRahausenClemens Clemens HaftendornHaftendorn, Daniel , Daniel HuppmannHuppmann, ,

FlorianFlorian Leuthold,FranziskaLeuthold,Franziska HolzHolz, Friedrich Kunz, Jan, Friedrich Kunz, Jan--HendrikHendrik NiehuesNiehues, , Joachim Joachim DitzenDitzen, Johannes , Johannes HeroldHerold, , KjetilKjetil MidthunMidthun, Lars , Lars HesseHesse, ,

Ruud Egging, Sophia Ruud Egging, Sophia RRüüsterster ,Tina Hahnemann,Tina Hahnemann

Enerday April 11 2008 Dresden Slide 2

Outline

Market Structure in the ModelModel DescriptionMotivation and ObjectivesResults of Case-StudiesConclusionsReferences


T11

P1

K1,2,3

S1

M1

P3

K1,2,3

S3

M3

R3

L1

Producer

Trader

SectorsMarketer

LNG Liquef

Storage LNG Regasif

Country 1 Country 3

Country 2

T31T31

T32

T12 T13

Market Structure


WGM – 70 Production Regions in 2005 (+3 in later years)

Algeria, Angola, Egypt, Libya, Morocco, Nigeria, South Africa, Tunisia(Equatorial Guinea, Mozambique)

Austria, Belarus, Bulgaria, Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Romania, Slovakia, Spain, Turkey, Ukraine, United Kingdom

Canada-East, Canada-West, Mexico, USA-Alaska, USA-East, USA-Gulf, USA-MidWest, USA-Rockies, USA-West

Argentina, Bolivia, Brazil, Chile, Ecuador, Peru, Trinidad & Tobago, Venezuela

Russia-Sakhalin, Russia-Volga-Uralsk, Russia-West

Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan

Australia, Brunei, Burma, China, India, Indonesia, Japan, Malaysia, Pakistan, South Korea, Taiwan, Thailand

Iran, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates(Yemen)

Basic Map from: www.insectzoo.msstate.edu/Curriculum/Activities/WorldMap.html


WGM – 75 Consuming Regions: (non-producing in 2005 are underlined)

Basic Map from: www.insectzoo.msstate.edu/Curriculum/Activities/WorldMap.html

Algeria, Angola, Egypt, Libya, Morocco, Nigeria, South Africa, Tunisia

Austria, Baltic Region,Belarus, Belgium & Luxembourg, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom

Canada-East, Canada-West, Mexico, USA-Alaska, USA-East, USA-Gulf, USA-MidWest, USA-Rockies, USA-West

Argentina, Bolivia, Brazil, Chile, Ecuador, Peru, Trinidad & Tobago, Venezuela

Russia-East,Russia-Volga-Uralsk, Russia-West

Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan

Australia, Brunei, Burma, China, India, Indonesia, Japan, Malaysia, Pakistan, South Korea, Taiwan, Thailand

Iran, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen


World Gas Model

Market Equilibrium Model with Optimization Problems for Individual Players

Mixed complementarity problemTypical decision variables

operating levels (e.g., production, storage, etc.)investment levels (e.g., pipeline, liquefaction capacity)

Other featuresMultiple years (i.e. 2005, 2010 up to 2030)LNG contract database, not just spot marketTraders can have market power


Cases - Motivation and Objectives

Case I: Increased Demand & LNG capacities

Increasing gas demand (WEO 2007) Currently LNG liquefaction is restrictiveMany LNG terminals planned and under construction, both liquefaction and regasificationPositive scenario: 2015 – all capacity in place how are trade flows and prices affected?


Motivation and ObjectivesCase II: Demand Growth in India and China

IEA(2006) estimates a demand-increases for natural gas in China (47 169 bcma) and India (31 90 bcma) in the time span 2004-2030But Domestic production capacity is insufficient

need additional import-capacity (LNG+pipelines) Assessing the impact on the World Gas Market (existing production rates + prices)


Motivation and ObjectivesCase III: Demand Decrease in Europe

Diversification of Energy Sources away from gasCCS makes coal a viable option in carbon restrained worldSupply Security

How are prices and quantities affected?Effects on trade flowsImpact on other World regions


Input: WEO Reference and Alternative Policy 2015Demand Increase Projections

Importer Reference Scenario Alternative ScenarioChina 160% 194%India 66% 63%USA 16% 14%UK 16% 15%France 16% 15%Spain 16% 15%Germany 16% 15%Italy 16% 15%Russia 20% 13%Japan 50% 34%Korea 50% 34%


Case I: 2015 Increased Demand and Capacities Adaptations of LNG Capacities (mcm/d)

Liquefaction in mcm/d

N-AM:

+237.7

S-AM:

+16.6

AFR:

+128.38

M-East:

+288.6

As-Pac:

+166.46

EUR:

+303.1

EUR:

+15.9

RUS:

+36.3

ASIA:

+303.1

Regasification in mcm/d


Results: Role of the Middle East LNG Flows from the Middle East (high season data in mcm/d)

Importer Base Model Reference Case Alternative Case

China No LNG imports from ME QAT: 6.0UAE: 18.0

QAT: 28.4UAE: 18.0Oman: 5.0

India Oman: 5.9QAT: 18.4

Oman: 5.9QAT: 18.4

Oman: 5.9QAT: 18.4

Japan Oman: 12.8QAT: 22.1UAE: 16.4

Iran: 31.4Oman: 10.9QAT: 22.1

Iran: 5.1Oman: 10.9QAT: 22.1

Korea Oman: 16.6QAT: 17.7

Oman: 18.5QAT: 17.7

Oman: 13.5QAT: 17.7

UK; US No LNG imports from ME No LNG imports from ME No LNG imports from ME

Spain QAT: 13.1OMN: 5.0UAE: 2.8

QAT: 13.1OMN: 5.0UAE: 2.8

QAT: 13.1OMN: 5.0UAE: 2.8

Germany No LNG imports from ME No LNG imports from ME Iran: 13.9

Italy UAE: 0.7 Iran: 47.4 Iran: 47.5


Results: Wholesale Prices

0

50

100

150

200

250

300

350

China

Franc

eGe

rman

y

Italy

Japa

nRu

ssia

East

Russ

ia W

est

Korea

Spain UK

US Ea

stUS

Gulf

US W

est

who

lesa

le p

rice

in €

/100

Base Model Reference Alternative


Case II: 2015 Demand China/India +60% (added pipelines + regasification bcma)

+130

30

33

20


Price Changes for CaseDemand Growth China & India, no capacity expansion

- Wholesale price increase

- Wholesale price decrease


Price Change for CaseDemand Growth China & India, pipeline expansion



New Pipeline


Price Changes for CaseDemand Growth China & India, pipeline and LNG expansion



New Pipeline


Case III: Demand-decrease in the European Gas-Market

p

q

European demand decreases witheither 20% or 40%

Implemented by changing the slopes of the inverse demand curves

LNG Contracts are 50% of 2005 levels


Change in quantities

0

50

100

150

200

250

300

350

400

450

Austria Germany The Netherlands Japan Nigeria USA

Base Case

Demand 0.8

Demand 0.6


Change in prices

0

50

100

150

200

250

300

350

Austria Germany The Netherlands Japan Nigeria USA

Base Case

Demand 0.8

Demand 0.6


Changes in Natural Gas Supplies By Source

0 50000 100000 150000 200000 250000 300000 350000

Demand 0.6

Demand 0.8

Base Case

PipelineLNGOwn Production


Changes in the World Natural Gas Market

0

500

1000

1500

2000

2500

3000

Base Case Demand 0.8 Demand 0.6

Scenario

bcm

Total ProductionLNG MarketStorageConsumption


Conclusions

By case:LNG expansions planned and under constructionare sufficient for anticipated increase in tradedvolumesChina and India at a western standard of livingmeans also paying western prices for gasEuropean Demand decrease has significantimpact on Europe, but modest on rest of World


Thank you for your attention

Questions?


References

Egging, R., S.A. Gabriel, F. Holz, J. Zhuang, A Complementarity Model for the European Natural Gas Market, Energy Policy, January 2008 (accepted)Energy Modeling Forum 23: World Natural Gas Markets and Trade, www.stanford.edu/group/EMF/projects/projectemf23.htm

enerday 2008 · enerday april 11 2008 dresden slide 6 world gas model market equilibrium model with...

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